Greece is facing a full-blown banking crisis after a meeting of euro zone finance ministers broke down in acrimony and recrimination on Thursday evening, bringing the prospect of Greek exit from the euro zone a step nearer, The Guardian reported Friday.
Some € 2bn of deposits have been withdrawn from Greek banks so far this week – including a record €1bn yesterday – triggering fears that a breakdown in talks would spark a further flight of funds.
The German leader Angela Merkel, French president François Hollande and Greek prime minister Alexis Tsipras agreed to stage an emergency EU summit on Monday as a last critical attempt to prevent Greece going bankrupt.
A representative of the European Central Bank told the meeting it was unsure whether Greek banks would have the funds to be able to open on Monday.
As thousands of pro-EU protestors gathered outside the Athens parliament building, leaders of the euro zone and the International Monetary Fund aimed bitter criticism at the left-wing Greek government, accusing it of lying to its own people, misrepresenting and misleading other EU leaders, refusing to negotiate seriously, and taking Greece to the brink of catastrophe.
The Luxembourg talks broke down within an hour of discussions about the Greek crisis starting, indicating the bad blood between both sides.
Christine Lagarde, the head of the IMF, said there was an urgent need for dialogue “with adults in the room”. She added: “We can only arrive at a resolution if there is a dialogue. Right now we’re short of a dialogue.”
The current bailout for Greece expires on 30 June when Athens is also due to repay the IMF around €1.6bn. Lagarde said if the payment is not made on time, Greece will be declared to be in default and would disqualify itself from receiving any further IMF funds.
A senior EU official taking part in the meeting told the Guardian that Monday’s summit was convened as soon as EU leaders learned of the collapse of the Luxembourg talks.
The spectre of a Greek banking collapse under the weight of withdrawals prompted the meet, he said.
The standoff is over what actions Greece has to take to access the remaining € 7.2bn in bailout funds.